6 money decisions you can feel good about instead of beating yourself up over holiday spending
- It's common to overspend and overindulge during the holidays, but there's no use in beating yourself up for it.
- There are a handful of wise money decisions you can still make to set yourself up for a prosperous 2020.
- Opening a high-yield savings account for a new goal, getting disability insurance to protect your income, or meeting with a financial planner, for example, can propel you in the right direction.
- Read more personal finance coverage.
Overconsumption and overspending are hallmarks of the holidays, but there's still time to get back on track.
Some of the most important financial tasks don't require tons of time or expertise to complete, and checking them off your list now can propel you in the right direction.
Here are six things to do today for a prosperous 2020:
1. Open a savings account for a goal
There's no better time to open a high-yield savings account than when you're saving for something specific, whether it's overseas travel, wedding expenses, or your first home. There's no downside to a high-yield savings account - your money is safe from market risk, earning up to 200 times more interest than your checking account, and accessible when you need it.
Keeping your cash for a specific purpose separated from your everyday spending account can also help curb impulse spending and make it easy to track progress toward your goal. Make the whole process automatic by logging in to your payroll provider or checking account and setting up regular, automatic deposits or transfers into your new savings account.
2. Increase your retirement contribution
It's easy to stick to the status quo when it comes to retirement savings, especially if you're contributing automatically through a workplace plan like a 401(k) and don't actively move the money between accounts every month. But if you challenge yourself to increase your savings rate right now, you won't be sorry.
A small percentage increase shouldn't feel like a huge hit to your wallet, but it will make positive impact on your investment earnings down the road. Experts recommend working your way up to contributing 10% to 15% of your income to investment accounts for retirement, depending on your retirement needs and goals. Wherever you are now, try bumping up your deferral rate by 1% to 3%, then revisit it in six months or sooner if you get a raise.
3. Call a financial planner
A new calendar year is the perfect time to call your financial planner or meet with one for the first time. Not only will it encourage you to reflect on the past year's financial milestones, accomplishments, and challenges, you'll be able to set forth a plan for the coming year and beyond.
Before your first meeting, think about your goals for the next 12 months and write out any specific questions you have so you can hit the ground running.
4. Get life insurance
There's no better time to get a good deal on life insurance, because you'll never be younger and healthier than you are today. If someone other than you relies on your income to live - a spouse, a child, a parent, or a sibling - you should strongly consider getting life insurance so they have financial support in your absence.
Even if you don't have financial dependents but you have large amounts of debt, a life insurance policy can help repay those debts when you die so your creditors don't come after other assets you leave behind.
If you opt for term life insurance - which covers you for a fixed period of time, usually between 10 and 30 years - you'll likely pay between $25 to $50 a month, depending on how much coverage you get and your health status.
5. Get disability insurance
Disability insurance is something too many people overlook. It's human folly to believe something bad won't happen to us - until it does and we regret not preparing for it.
If you got injured or sick tomorrow and couldn't work for a period of time (or ever again), would your financial stability suffer to any degree? If yes, then you should have disability insurance to replace your income.
6. Pay off a credit-card balance
The first step to building substantial wealth is getting free and clear of consumer debt. If you have credit-card debt with a double-digit interest rate, paying it off should be at the top of your priority list.
Set aside any shame or self-doubt and make a concrete plan, whether it's looking into a balance transfer credit card; putting extra money toward your monthly payment; using a holiday windfall or tax refund to make a large lump-sum payment; or consolidating your balances with a personal loan.
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Disclosure: This post is brought to you by the Personal Finance Insider team. We occasionally highlight financial products and services that can help you make smarter decisions with your money. We do not give investment advice or encourage you to adopt a certain investment strategy. What you decide to do with your money is up to you. If you take action based on one of our recommendations, we get a small share of the revenue from our commerce partners. This does not influence whether we feature a financial product or service. We operate independently from our advertising sales team.
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